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Japan's SoftBank Group Corp will invest $2.25 billion in General Motors Co's autonomous vehicle unit Cruise, the companies said on 31 May, a deal that validates the venerable Detroit automaker's leadership in self-driving cars and sent GM shares up nearly 13 percent.
The move by SoftBank's $100-billion Vision Fund is one of the highest profile, largest investments to date in self-driving technology, an industry that could revolutionize transportation but faces engineering, safety and regulatory challenges, as well as skepticism among potential users.
The Cruise deal extends that wager, betting that computers will displace drivers and cut operating costs. GM Chief Executive Officer Mary Barra said GM might explore "other opportunities" with some of the companies that SoftBank has funded, including Uber, China's Didi, India's Ola and Southeast Asia's Grab.
The partnership values Cruise at $11.5 billion, a figure exceeding some analyst targets and a triumph for GM, which was criticised for overpaying an estimated $1 billion for the startup two years ago.
GM Cruise and Alphabet Inc's Waymo are often described as leading the pack of technology and auto companies competing to create self-driving cars and integrate them into ride services fleets.
Ford Motor Co and BMW both plan to deploy self-driving cars in 2021; Tesla Inc has talked about creating a network of self-driving cars and Uber says it is sticking with a development effort despite an accident in which its self-driving car killed a woman in Arizona.
Uber Chief Executive Dara Khosrowshahi on Wednesday also said he was in talks to use Waymo technology on the Uber network, a sign of how alliances and partnerships are still being formed.
Reason to ‘Own’ GM
The deal affirmed that GM was one of the top contenders to deploy self-driving ride hailing. “GM has a meaningful seat at the table," he said.
Barclays analyst Brian Johnson described the deal for GM as "a reason to own the stock again".
SoftBank Vision Fund will own a 19.6-percent stake in GM Cruise once the transaction is completed, and will hold one of six seats on the company's board. Its investment will be held in a preferred security that can be converted to GM common stock after seven years.
GM said it would break out reporting on GM Cruise financials as a standalone segment, starting in the second quarter.
GM has privately told lawmakers it needs Congress to approve long-stalled legislation on robot cars in order to eventually deploy the vehicles in big numbers.
SoftBank will take a stake in a newly created unit, GM Cruise Holdings, whose assets include Cruise Automation, based in San Francisco, and Strobe, a small self-driving sensor developer that Cruise acquired last year.
GM President Dan Ammann said GM Cruise also would oversee monetization of data generated by the company's self-driving vehicles, which he has said could provide greater margins than GM's traditional business of buying and selling cars.
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